CPRX or DSNKY: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Medical - Drugs sector might want to consider either Catalyst Pharmaceutical (CPRX) or Daiichi Sankyo Co., Ltd. - Sponsored ADR (DSNKY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Catalyst Pharmaceutical has a Zacks Rank of #2 (Buy), while Daiichi Sankyo Co., Ltd. - Sponsored ADR has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CPRX has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CPRX currently has a forward P/E ratio of 8.86, while DSNKY has a forward P/E of 19.61. We also note that CPRX has a PEG ratio of 0.71. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DSNKY currently has a PEG ratio of 1.27.

Another notable valuation metric for CPRX is its P/B ratio of 3.01. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, DSNKY has a P/B of 3.96.

Based on these metrics and many more, CPRX holds a Value grade of A, while DSNKY has a Value grade of C.

CPRX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CPRX is likely the superior value option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research